Key facts
- Oil prices have fallen to multi-month lows following a U.S.-Iran deal to reopen the Strait of Hormuz.
- Three Saudi-flagged supertankers carrying six million barrels of crude have sailed through the strait.
- Over 60 million barrels of oil are expected to head to Asia once the Strait of Hormuz reopens.
- Major investment banks have significantly lowered their oil price forecasts for late 2026 and 2027.
- Goldman Sachs analysts predict Strait of Hormuz traffic may only recover to 70% of pre-war levels.
Oil prices have fallen to their lowest levels since the start of the Iran war following a preliminary U.S.-Iran deal that is expected to reopen the Strait of Hormuz and ease sanctions. The agreement is anticipated to significantly boost global oil supply. Three Saudi-flagged supertankers carrying six million barrels of crude have already sailed through the strait.
Major financial institutions, including Morgan Stanley, Goldman Sachs, and Citi, have revised down their oil price forecasts. Goldman Sachs now projects Strait of Hormuz traffic to recover to only 70% of pre-war levels by the end of July, with full production recovery by October.
Middle Eastern oil producers have been rerouting flows amid the crisis. Saudi Arabia is increasing shipments via its East-West pipeline, while the UAE plans to bypass the Strait of Hormuz with a new pipeline. Iraq is also considering increased oil flows through its pipeline to Turkey. Despite the expected increase in supply, analysts caution that prices may not collapse entirely due to recovering demand and efforts to refill inventories.